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Rare Earths in Australia's Gascoyne Region

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Several major players in Australia's mining industry have recently identified the Gascoyne region as highly prospective for rare earths, and the area could become a hub for production in the future.

Rare earth elements are arguably some of the most important minerals in the world.

They're key manufacturing components in multiple industries and technologies, including healthcare, consumer electronics, automotive, defence and aerospace. They're also a critical component in clean energy technologies, such as solar panels and wind turbines — making them essential for the transition to net zero.

As the third largest global producer of rare earths in 2022, Australia has a critical part to play in establishing a stable global supply of these crucial minerals. In that regard, the country's emerging Gascoyne region may prove to be a game changer.

What are rare earth elements?

The term rare earth elements refers to a group of 17 metals that often occur in proximity to one another, albeit in varying concentrations. Rare earths are generally divided into two categories based on atomic weight — either heavy or light . Beyond this, each rare earth element is distinct from its peers, with its own properties and use cases .

Some, such as neodymium, are critical components in rare earth magnets for everything from military applications to electric vehicle motors. Others are used to manufacture consumer electronics like smartphones. Rare earths are also leveraged extensively by the glass industry for everything from polishing to colouration.

Given their criticality, it's fortunate that the term rare earth elements is actually something of a misnomer. The name stems from the fact that, although rare earths are technically more plentiful than gold, silver and platinum, they're usually widely dispersed in low concentrations, meaning many rare earths deposits are commercially non-viable — at least historically. Overall, however, there are enough rare earth reserves to fuel global decarbonisation efforts.

You wouldn't know that by looking at the current state of the global market, though. While a range of countries have been major suppliers of rare earths over the last century, China, which hosts the world's highest rare earths reserves, has become by far the largest producer of rare earths over the last 50 years .

The country's quick expansion came with questionable ethical practices and a lack of the environmental controls necessary to keep rare earths mining from causing severe harm to the environment. China has also used its market dominance as a political weapon, including cutting off exports to Japan in 2010 as part of tensions between the two countries.

Given the geopolitical climate alongside China's recent announcement that it may ban certain rare earth exports , it's now more imperative than ever to find alternative sources. Unfortunately, this is far easier said than done. China not only has larger reserves than any other country, but is also home to the largest producing rare earths deposit in the world .

Beyond that, China maintains a stranglehold on the rare earth supply chain , the result of over two decades of strategic planning. Because of this, it has long been the destination of choice for rare earths processing, controlling an estimated 85 percent of the refining process. Most countries quite simply lack the resources to establish comparable infrastructure.

The problem is twofold . First, rare earths production is both prohibitively expensive and technically complex, requiring specialised processors for separation and refinement. Rare earths also occur in close proximity to radioactive elements such as thorium, meaning they present a potential health risk for anyone involved in production and to the environment in the case of leaks.

That isn't to say that no one is making an effort to challenge China. On the contrary , multiple countries are working together to establish their own stable domestic supply and processing pipelines, including Canada, Angola, Australia and the US, as well as the European Union . Their strategies all hit the same common notes — put forth capital for the development of additional production and processing infrastructure, then work with mining companies to identify and develop promising deposits. Already, these programs have seen some modest success.

In 2020, the US Department of Defence collaborated with Lynas Rare Earths (ASX: LYC ,OTC Pink:LYSCF) and Blue Line to create a rare earths separation facility in Texas . In 2022, the Saskatchewan government announced the development of Canada's first ever rare earths processing facility . That same year, mining and exploration company Arafura Resources (ASX: ARU ,OTC Pink:ARAFF) received AU$30 million from the Australian government to build Australia's first separation plant.

Unfortunately, even once these facilities come online, it's highly likely that China will remain at the top of the rare earths market for at least another decade . But at the very least, they're a good start.

Rare earths in Australia's emerging Gascoyne region

The second largest global producer of rare earths, Australia also hosts the fifth largest reserves in the world at 4.2 million tonnes. The country's mining industry is one of the largest and most lucrative in the world, with a mineral production value of US$121 billion in 2020 . For context, the next-largest producer was the US, with a total value of US$55.4 billion.

Unsurprisingly, Australia is home to a slew of major rare earths companies — some have even gone so far as to call it the next frontier in rare earths , pointing to exceptionally high-grade projects such as Lynas's Mount Weld central lanthanide deposit . For investors, Western Australia's Gascoyne region in particular is emerging as an area to watch.

Already known for its rich and diverse mineral deposits , several major players in Australia's mining industry have recently identified the Gascoyne area as highly prospective for rare earths, establishing projects at various stages of development.

The company that arguably best exemplifies the current potential is Hastings Technology Metals (ASX: HAS ,OTC Pink:HSRMF) with its Yangibana rare earths project. Currently under construction , the AU$658 million project is expected to begin production in the second half of 2024. Yangibana covers roughly 650 square kilometres, including the majority of the Gifford Creek ferrocarbonatite complex. The 100 percent owned project's total proved and provable ore reserves currently sit at 20.93 million tonnes.

Yangibana aside, Gascoyne is home to multiple rare earths projects, including Dreadnought Resources' (ASX: DRE ) Mangaroon project and Lanthanein Resources' (ASX: LNR ) Gascoyne project. And these are far from the only players present in the region — Voltaic Strategic Resources (ASX: VSR ), Reach Resources (ASX: RR1 ), Kingfisher Mining (ASX: KFM ), Odessa Minerals (ASX: ODE ), Augustus Minerals (ASX: AUG ) and Miramar Resources (ASX: M2R ) all have multiple rare earths projects at various stages of exploration and development.

It isn't just rare earths drawing companies to Gascoyne, either. The region is also gaining significant attention from companies focused on other critical metals such as lithium.

Investor takeaway

Rare earths are crucial to modern life and pivotal in the transition to a more sustainable future. Unfortunately, production and processing are both largely controlled by China on the global stage. Multiple countries have recognised the problems this poses and are implementing long-term strategies to establish stable domestic supply of these critical minerals.

As a current global leader in rare earths, Australia will play a central part in these efforts, with its emerging Gascoyne region showing the potential to become a major production and processing hub. Factoring in that Western Australia's mining industry is both highly competitive and well developed, one thing becomes clear. For anyone looking to invest in Australian minerals, Gascoyne is an excellent place to start.

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